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15 August 2019

Crypto Broker Weekly Rotation Report Week 33

Patrick Heusser

Patrick Heusser

Senior Trader bei Crypto Broker AG

Über den Autor

This is our Crypto Broker Weekly Rotation Report, directly from the Crypto Broker trading floor, with extensive insights into the crypto asset market, including quantitative data analysis, macro market comments, technical chart analysis, and rotation (sector) analysis. A PDF version of the report can be found at the bottom of this page.

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Contents

1 Rotation Analysis

2 Altcoin Futures Basis Analysis

3 Top Ten Comparison

4 Volatility and Correlation Comparison

5 ETHBTC 4h Technical Chart Analysis

6 Market Capitalisation Overview

Glossary

1 Rotation Analysis

There is no  relief in sight for the altcoin market

Despite seeing some correction against the prevailing downtrend last week our indicators are not pointing towards a turnaround.

First of all, we saw a significant tightening of the altcoin futures basis across the board. Then we saw the correlation creeping again, which in the past has been in favour of an outperformance of bitcoin. Additionally, our MACDs are not pointing (yet) in the other direction. But it is worth mentioning that last week’s correction in altcoins has been noted as an indicator. Especially in the advance decline line, we saw the rumble (similar to the correction in end of June 2018).

2 Altcoin Futures Basis Analysis

The bases already tightened before the big sell-off

Based on the overnight sell-off and the mechanics of our snapshots, the overall picture does not look that bad. But actually it is. On our basis table we are already seeing a tightening of most of the contracts. And if we add in the change that happened overnight, we have between a 1.5% and 3% downmove across the board.

What stands out and looks strange to us is the stubborn XBTUSD basis. For some reason this basis contracts very little compared to the others. Therefore, we expect that the basis will soon catch up with the others.

The bottom line: the basis correctly reflects the current state of the altcoin market. There is still no sign of an altcoin season.

3 Top Ten Comparison

4 Volatility and Correlation Comparison

5 ETHBTC 4h Technical Chart Analysis

Markets do not go down in a straight line

After we traded as low as 0.01745, we saw a correction from the downmove at around 0.0225. The question now is how high will the correction go? As we are not seeing clear signs of a trend reversal, we think this will just be an intermediary rally. Taking the Ichimoku cloud into account, our bearish trendline (black), and the Fibonacci retracement levels, there is a good chance that we will see a turnaround at the 0.0200 level.

In fact, the market turned with brutal force yesterday night just shy of that level at 0.01980. There was high volume going through in most of the top 10 pairs.

If we are correct and this was just a correction in the overall downtrend, we expect to see the takeout of the recent lows over the course of next week. This would fit into our big picture analysis we wrote about one month ago about the massive descending triangle that broke to the downside with a much lower target than where we are currently trading.

 

6 Market Capitalisation Overview

Glossary

Advance Decline Line – the Advance Decline Line shows the ratio of coins for which the market cap increased relative to the market cap of BTC for each day.
ATH – all time high (maximum lookback period of 730 days).
Data source – tables and charts are based on daily close prices provided by Coinmarketcap.
EWMA – exponentially weighted moving average.
MACD – moving average convergence/divergence is a popular technical indicator to identify trends in the underlying instrument. It consists of the MACD and signal line, and the area shown in the background. The MACD line (strong) is the difference of two exponential moving averages, which are defined by the first and second parameter of the indicator. The signal line (weak) is the exponential moving average of the MACD line defined by the third parameter. The area in the background illustrates the difference between the MACD line and the signal line.
Pearson Correlation – quantifies the linear relationship between two variables.
Spearman Correlation – quantifies the monotonic relationship between two variables. As such, the Spearman Correlation is based on the ranked values of each variable and is used to detect non-linear relationships between the two.

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Download the Rotation Report as a PDF here.

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